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Select previously discussed a group of individuals who are high earners but aren’t rich yet (known as HENRYs). In short, HENRYs have higher-than-average salaries but often don’t think they’ll become rich because of factors like high tax rates, high cost of living and student loan debt, or they might be building their wealth yet don’t have enough saved yet to be considered rich.
If you’re someone who’s part of a couple with two incomes and no kids, don’t worry, there’s a name for you, too. You’re what’s known as a DINK — otherwise an acronym for Dual Income, No Kids.
DINKs often split household and lifestyle expenses and work toward financial goals together. It can often be easier to reach a goal on two incomes rather than just one. And when you don’t yet have children, you have more flexibility, and likely more disposable income, to be more aggressive with certain goals.
But regardless of how much your combined income adds up to, what you do with the money is more important. We asked Brian Walsh, a CFP at SoFi, to weigh in with some advice for childless dual-income couples who feel ready to take their next steps financially. Here’s what he shared.
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It’s important to note that just because you’re part of a dual-income household, it doesn’t always mean you’re automatically financially well off. Factors such as salary, cost of living, debt and necessary personal expenses can all play a huge role in a couple’s financial health. So, first thing’s first: You need to cover a few financial bases as a couple. This can include having a fully funded emergency savings account for the two of you, making sure you’re each contributing enough to receive any match on both of your company’s 401(k) accounts (if applicable) and paying down high-interest debt.
According to Walsh, once a couple has these financial boxes checked, they should begin to talk about how to prioritize their other major money goals.
“From here, you can focus on what is most important to you,” he says. “For some, this may be retiring early, so you will want to focus any extra savings toward increasing your retirement contributions. For others, it may be buying a house, so you will want to focus on saving up for that down payment.”
It’s hard to know what steps you should be taking when you don’t even know what goal you’re trying to achieve. You also don’t want to just take shots in the dark only to realize that by doing things a little differently, you could have purchased that house or made significant progress toward saving for retirement. This is why it’s important to discuss what you’d each like to be able to afford and if there are any significant milestones that would be meaningful to you.
“There is no one size fits all, but the most important thing to do is make sure you are on the same page as your partner,” Walsh says.
Stacking your savings with as much cash as possible (and as early as possible) can help you feel like you have more choice when faced with any large future expenses. And when you have a partner to achieve savings goals together, you can get there even faster. So it’s important to do your best to save as much money as possible — especially if you hope to have kids in the future.
“Before [having] kids, everyone warned me that everything changes once kids are in the picture,” Walsh explains. “As a parent, I appreciate that this also applies to finances. Kids are expensive and only getting more expensive given the inflation rate, especially for things like child care. Saving for retirement or other goals becomes that much harder when you have the added expenses associated with kids.”
Walsh also warns that if you did not create a habit out of saving money before you had kids, putting money away will be even harder once kids are in the mix. Automating your savings is one easy way to build that muscle for setting aside cash for the future. You can typically log in to your online bank account and schedule recurring transfers from your checking into your savings for a specific day each week or each month.
Where to build savings
Kudos to you and your partner if you both already have your money automatically transferred into an online high-yield savings account. With a high-yield savings, you’ll be able to earn a greater interest rate on your balance compared to just keeping your money in a traditional savings account.
There are lots of solid high-yield savings accounts out there but Select’s top choice for the best overall is the Marcus by Goldman Sachs High Yield Online Savings, since it offers an above-average annual percentage yield (APY), charges no fees whatsoever and provides users with easy mobile access. It is the most straightforward savings account to use when all you want to do is grow your money with zero conditions attached.
Tools to help you save
If you and your partner want to get into the habit of saving for a variety of specific goals simultaneously, consider trying the Digit app. The app connects to your checking account and allows you to create different savings “buckets” for things like a vacation, a home purchase or just a really expensive item you’ve been eyeing. The app then automatically saves a small, randomized amount of money toward each of those goals every single day so you’re basically saving on autopilot.
Once you and your partner build that muscle for saving and feel confident in it, repeat the process with investing. While it may seem intimidating at first, investing is the best way to grow your wealth and it can be the backbone of your retirement.
The earlier you start investing, and the longer you stay in the market, the more you allow your money to maximize the amount of compound interest it can earn. (Compound interest is pretty much when your interest and gains stack on top of one another.) Though keep in mind putting your money in the market does mean you are taking on substantial risk. There are three main components to growing your money through investing: the amount you contribute monthly, your rate of return and how long you have to save.
Investing both your income and your partner’s income can allow your household to build sizable wealth much faster, especially if you start as early as possible and allow your money to grow over the course of 30 or 40 years.
“With investing, time can either be your best friend or your worst enemy,” Walsh says. “Starting early makes time your best friend as you enjoy the benefits of compounding growth. Putting it off makes time your worst enemy as you are forced to save significantly more to reach your goals.”
Where to invest
A good app for couples investing together is Twine. With Twine, couples can choose a joint goal (house, large purchase or vacation) and identify a monetary target. Each partner then links their Twine investment and savings accounts to a checking account and sets up recurring transfers. As their balances grow, couples can see a combined account interface that includes each partner’s accounts and shows them their joint progress toward their goals.
Another hands-off approach entails using a robo-advisor like Wealthfront or Betterment to help you determine which investments make sense for you based on your risk tolerance, goals and time horizon. Robo-advisors also take on the task of automatically rebalancing your portfolio as you get closer to the target date for your goals (be it retirement or buying a house). This way, you don’t have to worry about adjusting the allocation yourself.
For those who don’t currently have kids but hope to start a family in the future, Walsh recommends beginning to plan ahead for any financial changes you may encounter to your income and expenses.
“Couples will need to ask themselves, ‘Will we continue to be a dual-income family or will we become a single-income family?'” he explains. “You’ll need to anticipate new additions to your budget, such as child care. Couples should also look into their insurance benefits, parental leave and disability policies through work and make sure they understand what this means for them.”
If you think there’s a good chance you won’t continue to be a dual-income family and will instead rely on one partner’s income, consider some workplace benefits you might be able to use to cover some costs, like an HSA or a dependent care FSA.
Individuals who are part of childless dual-income households may be in a place where they not only have a partner to split lifestyle costs with, but can also begin to make powerful financial moves like getting ahead on their savings, investments and retirement funds since they don’t have the expenses of raising a family.
It may be easier to make progress toward some financial goals when you’re able to work alongside someone. But if you do plan to have kids, Walsh recommends financially preparing for the additional expenses and potential income loss if you convert from a dual-income household to a single-income family once you have the child.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.